The table below shows how the marginal benefit of pizza dinners varies for Luigi with the number consumed per month.Dinners per monthMarginal benefit per dinner1$4.002$3.003$2.004$1.00Suppose the price per dinner is $4.99 and accurately reflects the marginal cost of the dinners to Luigi. Assuming that Luigi is rational, he will:
A. consume two pizza dinners this month.
B. consume three pizza dinners this month.
C. not consume any pizza dinners this month.
D. consume one pizza dinner this month.
Answer: C
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Assume that the price elasticity of demand for gasoline is -0.06. If the government tax causes the price of gasoline to increase by 50 percent, what will be the decrease in the quantity of gasoline demanded?
A) 0.5 percent B) 3.0 percent C) 8.33 percent D) 50 percent
Nonunion wages should be modeled as
A) sticky, because they imitate union wages rather closely. B) sticky, because their contracts cannot contain COLA clauses. C) perfectly flexible, because wage contracts are illegal outside of unions. D) perfectly flexible, because workers willing to take the risks of full wage flexibility are precisely those workers who have rejected unionization.
According to the cost-push theory, what is responsible for inflation?
(A) The economy is operating as though there was a war. (B) Too much money is in circulation. (C) Demand for goods and services exceeds existing supply. (D) Producers raise prices to meet increased costs.
To calculate GDP once national income has been computed, we must
A. add depreciation and indirect business taxes and transfer payments and subtract other business income adjustments and net U.S. income earned abroad. B. add indirect business taxes and transfers and subtract depreciation, other business income adjustments, and net U.S. income earned abroad. C. add indirect business taxes and transfers and subtract profits. D. add depreciation and subtract indirect business taxes.